Here’s Facebook’s Answer to Groupon
At its IPO, Facebook (NASDAQ:FB) seemed like a great idea with a huge community that promised to – someday, somehow – monetize. In the last two weeks, disgruntled investors who watched their stake in the company depreciate about 40 percent are finally seeing a ray of hope. Facebook Exchange came out of beta with a bang, and now, according to Reuters, the company is going to be monetizing its Offers service.
Facebook Offers is the social network’s answer to Groupon (NASDAQ:GRPN). Retailers, and now online merchants, can send deals straight to the news feeds of their Facebook fans. Previously free, the service was sometimes a bit clunky as brick-and-mortar outlets would send discounts to fans living hundreds of miles away. The requirement to pay, according to Gokul Rajaram, director of product management for Facebook’s advertising and pages, “will focus merchants on who and where they want the offer to reach.”
The new model forces merchants to buy a minimum of $5 of related ad space to promote each offer. The price will scale with the size of the company.
BIA/Kelsey expects the online deal industry to grow to $4.6 billion in 2013. The new Facebook Offers model could help see shares regain the value they lost after the IPO, and convince investors that the hype was worth it. Facebook has climbed over 14 percent this month, but is trading down so far today at around $22.87.
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